| QUOTE (Willieisdead @ Apr 20 2009, 03:08 AM) |
| http://www.nytimes.com/2009/04/19/business...ner=rss&emc=rss Greg Menkiw suggesting negative interest rates... :think: |
| QUOTE |
| If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend. Having the central bank embrace inflation would shock economists and Fed watchers who view price stability as the foremost goal of monetary policy. But there are worse things than inflation. And guess what? We have them today. A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future generations. |
| QUOTE (fridaygolfer @ Apr 20 2009, 01:24 PM) | ||
i'm no economist. are you suggesting it's a good idea or a bad one? it's above my pay grade. |